1. Field of the Invention.
The present invention relates to a method and apparatus for inventory control, in general, and, more particularly, to such a system for the maintenance, management and control of inventory to be used by
A. Manufacturers/distributors for the purpose of: PA1 B. Dealers for the purpose of: PA1 1. Massive numbers of consumable products with a single code to identify each item together with constant, rapid inventory turnover; PA1 2. Sale of random combinations of such items in moderate quantities (20-50 items) at frequent intervals (e.g., weekly) passing through a checkstand attended by a cashier; PA1 3. Immediate billing by distributors with short term payment of wholesale cost by retailers; PA1 4. Close approach to and individual examination of each item to establish direct line-of-sight between the bar pattern and the scanning device; and PA1 5. Relatively inexpensive products. PA1 1. Relatively expensive (hundreds of dollars and up); PA1 2. Major purchase items (annually to several years between puchases, typically); PA1 3. Relatively long floor time at the dealers location (weeks to months); PA1 4. Financing of the dealers' inventory (due to large capital requirements to maintain these products), with payment terms based on time of sale to the consumer; and PA1 5. A unique serial number which identifies each item.
(1) Optimized distribution to dealer networks through large centralized warehouses; PA2 (2) Close control and tracking of sold units and rapid, efficient collection therefor; PA2 (3) Generation of current sales data on a daily basis to optimize; PA2 (4) Optimum unit sales planning; PA2 (5) Territorial sales statistics for more efficient ordering and internal inventory maintenance.
(a) Sales and marketing campaigns; PA3 (b) Production, shipping and distribution planning as the system matures and the statistical data base increases; and
2. Description of the Prior Art.
Presently, the known automated, opto-electronic inventory control systems are generally based on a bar or pattern code imprinted somewhere on the item or its container. This system is used primarily with mass produced, consumable products. Each pattern code identifies a unique item and it occurs on each such item produced, frequently numbering in tens to hundreds of millions.
Point-of-sale control is implemented with laser beam scanners which generate the data to interpret the code, and interface with central computer systems. Pricing and internal inventory maintenance are at the discretion of the individual retailer who creates his own applicable software. Inventory control on shelves and displays may be maintained with portable equipment consisting of a bar pattern scanner and some type of storage device which can interface with the central computer system.
The key characteristics of this known system are:
Most other existing inventory control methods involve direct one-by-one count of individual items. The resulting data may or may not be further processed by computer. If computer processing is desired, the hand-counted information must be input into the computer by hand also. Included in this category is an array of products sold in large numbers (10-20 million annually) with an immense economic impact. Currently, this approach entails a large expense to manufacturers-distributors to control inventory and protect their investment.
The key characteristics of this type of product are:
Following the shipment from point of manufacture, each unit must be identified and tracked into central distribution warehouse facilities, and therefrom into the dealer network until sale and payment. The procedure of physical inspection and visual identification by serial number is a manpower-intensive technique. This process is not only expensive in and of itself, but also prone to the generation of considerable additional expense for several reasons.
For example, warehouse control is imperfect, with the result that the distributor has many units in his possession of which he is unaware. These units are not in the field, exposed for sale. Consequently, many models are not available to the public at the optimum time, and many other units remain unsold at the end of the model year. The former situation frequently results in a requirement to shift models to other warehouse locations throughout the country. Expenses are incurred for shipping, accounting, distribution and warehouse in/out charges. Unsold units in warehouses accumulate storage fees. The problem of unsold units creates a backlog of non-current models. In reasonable economic circumstances, these units must be discounted to enable dealers to move them, at the cost of lost profits. In difficult economic times, disposal of an excessive supply of non-current models is more difficult. In addition, there are serious problems in the introduction of new models to maintain competitive positions. Errors also occur in dealer pick-up at the warehouse, which create handling and accounting expenses.
Control at dealers' locations is even more difficult. Because of sheer volume of numbers, and floor check fees based on unit count, it is difficult to count more than once a month. In situations where distributors are financing the inventory, this means the dealers are floating on a substantial amount of the distributors' money, with attendant "cost-of-money expense".
More frequent floor checks are required in problem situations, e.g., non-payment for sold units. Thus, the system with infrequent checking tends to breed the problem, while the solution (more frequent checking) only adds to the expense. In any event, by the time a problem of this nature is discovered, it is usually too late to avert large losses.
The system tends to create problems because it has a number of significant error sources. Serial numbers may be misread (from the item label); misunderstood (by one member of a team writing down spoken serial numbers); and transposed or misread from the written record in a succeeding tabulation. Units still in the dealers' possession may be missed in a large store (through normal daily activity in the store during the counting process, or by simple mistake). Correction of these errors requires manpower expense from the staffs of the dealer, checker and distributor. Furthermore, all of the good data collected by the floor checkers must be processed by the distributors' accounting staff for input into his computer system. The human factor inherently includes some errors and, thus, more expense to resolve them.
Units not associated with the unsold inventory may be included in the count, for example, units in for service, units otherwise owned by the dealer, or units mistakenly paid for while unsold (missed in one check, counted in a subsequent check). The checking contractor may bill the unit count cost for such counted units. To check the checker for this type of unauthorized billing is an expense to the distributor.
Accounting data from the inventory count is related to sales data. Currently, in many industries using this type of control system, there is considerable delay in receiving and assimilating the sales statistics. There are several ways to acquire this information: direct polling of dealers, tabulation of warranty registrations, and summary report by commercial marketing statistics companies. The latter are typically 1-2 months out-of-date. Dealers are usually harried with daily operations, and not too enthused about spending time talking with distributor sales managers to gather accurate sales figures. Dealers and customers are lax about completing and submitting warranty registrations, and distributors may only update warranty reports montly. All of these information sources are time consuming, expensive and inaccurate.
Lack of timely sales data can be costly. That is, problem areas may require action such as advertising, rebates, discounts or other dealer support programs to stimulate sales. Also, industries of the type described above are highly seasonal. With data over a month old, plus ensuing time to discover the problem and plan and implement corrective action, plus another delay to receive data related to the results of the action taken, it may be a matter of "too little, too late".
Sales patterns may require shifting of various models to other locations. If this is done on the basis of month old data, there may be great expense with little return. Advertising campaigns are expensive, and if effectiveness can be determined only with month-old data, it is difficult to control and plan a national program.
Sales statistics are related to production and shipping. Currently, in some of the relevant industries, there is little effective correlation between the two, based on up-to-date data. Hence, the problems of left-over models in the wrong warehouse are, to a great extent, built into the system. The economic consequences have been discussed previously.